Connect with us

Blockchain

CoinSwap and the Ongoing Effort to Make Bitcoin Privacy ‘Invisible’

Published

on

A developer known for working on enhancing Bitcoin privacy has set his sights on a new project he hopes will “massively improve” how we keep our transactions private.

Chris Belcher, who also created the technical privacy market JoinMarket, is currently working on putting to the test CoinSwap, an idea first proposed by legendary Bitcoin developer Greg Maxwell in 2013. Belcher has been focusing on CoinSwap rather than JoinMarket because he thinks it will give users better privacy, he told CoinDesk. 

Belcher recently received not just one, but two grants for his efforts, showing just how excited Bitcoiners are about the potential of the project.

Though the Bitcoin network arose from a privacy-minded movement, its privacy is actually pretty thin. Just take a look at any block explorer for a glimpse of how easy it is to pull up any transaction that’s ever happened in Bitcoin’s history – as well as the transaction’s associated history. 

Read more: Human Rights Foundation Funds Bitcoin Privacy Tools Despite ‘Coin Mixing’ Legal Stigma

“Right now, Bitcoin privacy is not very good at all. Anyone in the world can analyze the blockchain and then can find all sorts of information about users – their balance, their history, who they transact with and in what amounts, when – everything they spend,” Belcher told CoinDesk in an interview. 

Belcher argues that this is, in some ways, worse than the financial privacy we have in legacy systems today. “The banking system, they know your transactions, but the general public doesn’t. With Bitcoin it is the general public — it is everyone that can see exactly what the user does,” Belcher added.

He added it’s important to most people that this type of information isn’t exposed to the whole world.

“Financial privacy is good for human dignity, [for example], if you don’t want your neighbors to see what charities you donate to or that type of thing, or if you’re paid in bitcoin you don’t want your employers to know what charities you donate to or what other activities you’re involved in,” Belcher added.

CoinJoins: today’s Bitcoin privacy

“CoinJoins” (distinctive from “CoinSwaps,” which Belcher is putting to the test) are the privacy transactions that are most popular on Bitcoin today. CoinJoins give users good privacy and are becoming more popular. Thus far, they have been adopted in the Wasabi wallet, Samourai Wallet and JoinMarket. 

A CoinJoin takes all inputs from several transactions by different users and mixes them into one big, collaborative transaction. This one big transaction then sends the bitcoins mixed from different addresses out to different addresses. Because no one can tell where the spent bitcoins originally came from, the scent of the trail is obfuscated and the participants in the CoinJoin gain better privacy. 

Read more: What an Uptick in ‘Coinjoins’ Says About Bitcoin’s Value Proposition

But it’s not perfect. There are still ways for people analyzing the Bitcoin blockchain (namely blockchain analysis companies) to detect when and where bitcoins are being mixed. 

For one thing, the transaction sizes of mixed coins are much bigger than normal transactions because they contain so many different inputs.

Also telling is the fact they have outputs that are all the same size. “Equal output CoinJoins are very obvious. If someone sees them on the blockchain they can see that this kind of privacy protocol is happening,” Belcher said. 

Why are outputs the same size? If Bob sends 0.8 BTC into the CoinJoin transaction and Alice sends 0.187 BTC and Mary sends 1.2222 BTC, and the resulting outputs are exactly 0.8 BTC, 0.187 BTC and 1.2222 BTC respectively, that coincidence is pretty obvious to anyone who is looking.

In order to preserve privacy, a CoinJoin transaction usually splits the amount of bitcoin dispensed into even pieces, say 0.1 bitcoin. So, if Alice put in 0.3 bitcoin, she will receive three 0.1 pieces sent to three separate addresses that she controls.

Most transactions don’t have a bunch of equal outputs like this. That’s why CoinJoins are easy to detect. 

Indeed, there have been a few instances of cryptocurrency exchanges banning users who have evidently sent their bitcoin through such privacy services.

“They’ll be suspicious. If there’s someone analyzing the blockchain, they’ll see this is a CoinJoin, so they know this person did that. And if they see another transaction, [by comparison] they can see that it’s not a CoinJoin,” Belcher said. 

CoinSwap: an invisibility cloak for transactions

“CoinJoin” and “CoinSwap” have similar names and they both help to preserve privacy, so it’s easy to confuse them. But they’re different, and Belcher argues CoinSwaps “fixes many of the problems of some kinds of CoinJoins” and “is the next step for on-chain bitcoin privacy.”

CoinSwaps can be made to look invisible, Belcher said. If done correctly, a CoinSwap transaction can look just like a vanilla bitcoin transaction. 

In a CoinSwap, it looks like two separate people are sending completely separate transactions. But under the hood, something else completely is happening.

Two parties, say Alice and Bob, execute such a swap. In short, Alice sends some bitcoin to a CoinSwap address. Bob sends the same amount of bitcoin to a separate CoinSwap address. 

If both send the right amount of money over, the coins are “swapped.” The coins Alice sent to the CoinSwap address are sent to a new address owned by Bob, and the coins Bob sent to his own CoinSwap address are sent to a new address owned by Alice. 

‘Teleporting’ Coins

Under the hood, the CoinSwap address, which is responsible for this swapping, is much fancier than a normal bitcoin transaction. It’s a multi-signature transaction, meaning it requires more than one person to sign off on it in order to send the transaction. Usually, these types of transactions stand out on the blockchain since they look different from normal bitcoin transactions. But by including ECDSA-2P cryptography, these multi-signature transactions can be made to look just like normal bitcoin transactions. This is very much Belcher’s plan. 

With ECDSA-2P in place, “Alice sends a CoinSwap to Bob and it just looks like just a normal transaction. But actually the coins have ended up somewhere else completely,” Belcher said. 

This component is important. If all of these transactions look the same, people who aren’t even using CoinSwaps are getting more privacy too. There’s no way to tell if any transaction is a CoinSwap transaction or a normal one, turning bitcoin chain analysis on its head. 

Read more: ‘Financial Surveillance’ or ‘Blockchain Analysis’? Human Rights Foundation Debates Elliptic

Similar technology will expand to the Lightning Network as well, so blockchain watchers can’t tell if any single transaction is a CoinSwap, a Lightning Network transaction or just a normal bitcoin transaction.

“CoinSwap could be said to allow bitcoins to teleport undetectably to anywhere else on the blockchain,” as a description of the technology on the Bitcoin Wiki puts it. For a deeper explanation, check out this post from JoinMarket developer Adam Gibson.

That’s not to say that CoinSwap is perfect, though. The problem with CoinSwap is that it is a much more complicated process to implement than CoinJoin. 

‘As decentralized as possible’

In his mountain of a post, Belcher describes how to turn the idea of CoinSwap into reality.

A key reason CoinSwaps haven’t taken off since Maxwell described them seven years ago is that they’re not as straightforward as CoinJoins. So, Belcher has his work cut out for him in implementing the complexity for the first time. 

His first step was just thinking about the best way to do it, outlining a number of different design considerations in the article making up his plan of attack. For one, he plans to use the Rust programming language, since it’s potentially more secure than other languages.

“I want to make it as decentralized as possible, so there’s no central point of failure that can be switched off or censored,” Belcher said. To meet this goal, he wants the “whole thing” to run over the privacy network Tor, which helps to shield IP addresses, which are kind of like a mailing address for a computer exposing where it is located.

“I think that’s quite necessary for privacy,” he said.

Read more: BTCPay Looks to Anonymize Bitcoin Transactions With PayJoin Integration

Belcher outlines this and various other considerations in his proposal, such as routing and using PayJoin, yet another bitcoin privacy technology, alongside it. Now that his ideas are out in the public, people can comment and make suggestions.

The next step is actually implementing it. Belcher told CoinDesk he hopes to release a minimum viable product in the next six months.

Image: “BallesStrob-4” by MathGoulet is licensed under CC BY-ND 2.0.

Disclosure

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Source: https://www.coindesk.com/coinswap-and-the-ongoing-effort-to-make-bitcoin-privacy-invisible

Blockchain

TA: Bitcoin Key Indicators Suggest Risk of Extended Downside Correction

Published

on

Bitcoin price is down over $500 from the $13,850 swing high against the US Dollar. BTC is showing bearish signs and it could even decline below the $13,000 support.

  • Bitcoin failed to stay above the $13,500 support and declined below $13,200.
  • The price is currently consolidating near $13,200 and the 100 hourly simple moving average.
  • There is a key contracting triangle forming with support near $13,220 on the hourly chart of the BTC/USD pair (data feed from Kraken).
  • The pair is likely to resume its decline below $13,200 and $13,100 in the near term.

Bitcoin Price Starts Downside Correction

Bitcoin price traded to a new monthly high at $13,850 before starting a major downside correction. BTC broke the key $13,500 support level to move into a short-term bearish zone.

The decline gained pace below the $13,200 level and the 100 hourly simple moving average. The price even spiked below the $13,000 level and traded as low as $12,899. Recently, there was a recovery wave above the $13,000 and $13,100 levels.

The price traded above the 23.6% Fib retracement level of the recent decline from the $13,850 high to $12,899 low. Bitcoin is currently consolidating near $13,200 and the 100 hourly simple moving average.

Bitcoin Price

There is also a key contracting triangle forming with support near $13,220 on the hourly chart of the BTC/USD pair. If there is a downside break below the triangle support and $13,200, there is a risk of a fresh decline. The next major support is near the $13,000 level.

If the bulls fail to defend the $13,000 support level, it could open the doors for an extended downside correction towards the $12,600 level or $12,500 in the coming sessions.

Upside Break in BTC?

If bitcoin stays above the $13,200 support level, it could clear the triangle resistance near the $13,315 level. The next key resistance is near the $13,375 level. It is close to the 50% Fib retracement level of the recent decline from the $13,850 high to $12,899 low.

The main hurdle for the bulls is near the $13,500 level, above which the price is likely to restart its rally and it could even revisit the $13,850 high.

Technical indicators:

Hourly MACD – The MACD is likely to move into the bearish zone.

Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is now well below the 50 level.

Major Support Levels – $13,200, followed by $13,000.

Major Resistance Levels – $13,315, $13,375 and $13,500.

Source: https://www.newsbtc.com/analysis/btc/bitcoin-risk-of-extended-downside-correction/

Continue Reading

Blockchain

MicroStrategy CEO Michael Saylor HODLs $230M Worth Of Bitcoin Privately

Published

on

Michael Saylor, the founder and CEO of the Nasdaq-listed company MicroStrategy, has revealed that he personally HODLs nearly 18,000 bitcoins.

Additionally, he announced that his company has instituted a new Bitcoin-oriented treasury reserve policy and plans to make further BTC purchases.

Michael Saylor Owns 17,732 Bitcoins

The CEO of MicroStrategy has a somewhat compelling history with Bitcoin. As CryptoPotato reported recently, he said in 2013 that BTC’s days are “numbered.” However, he has completed a one-eighty since then and has been quite bullish on the cryptocurrency in recent months.

The company that he founded more than three decades ago bought a total of 38,250 bitcoins in two batches. This substantial amount represents 0.18% of all bitcoins ever to exist.

Apart from MicroStrategy’s holdings, Saylor disclosed today his own BTC balance.

“Some have asked how much BTC I own. I personally hodl 17,732 BTC, which I bought at $9,882 each on average. I informed MicroStrategy of these holdings before the company decided to buy Bitcoin for itself.” – he tweeted.

To put his Bitcoin holdings into USD perspective, the amount equals $230 million, with BTC’s price trading around $13,000 per coin at the time of this writing.

MicroStrategy’s Bitcoin-Focused Reserve Policy

In a recent interview, Saylor also revealed his company’s Q3 results. Apart from displaying impressive quarterly numbers, MicroStrategy’s CEO announced a compelling new treasury reserve policy that focuses on Bitcoin.

“We have also instituted our new treasury reserve policy, which states that Bitcoin will be the primary treasury reserve asset for the company for capital that exceeds our working capital needs.”

MicroStrategy plans to purchase even more bitcoins as the company generates cash beyond what it needs to run the business of a day-to-day basis.

Millions of (Unrealized) Profit

Having in mind Saylor’s averaged price when he bought his BTC stack, simple math shows that he spent a little over $175 million. As mentioned above, the 17,732 bitcoins now have a value of over $235 million. As such, his profit, should he choose to sell the coins now, would be north of $50 million.

Additionally, a popular cryptocurrency commentator Kevin Rooke brought up similar statistics regarding MicroStrategy’s numbers. He said that the Nasdaq-listed company had earned $78 million in the last three and a half years from their business endeavors. However, if they sell their BTC stack now, their profit will be about $100 million in just two months.

MicroStrategy's Business vs. Bitcoin Profits. Source: Twitter
MicroStrategy’s Business vs. Bitcoin Profits. Source: Twitter

It’s worth noting that to register profit or a financial gain, one has to sell the asset he has previously purchased. Since neither MicroStrategy nor its CEO had actually disclosed selling their Bitcoin holdings, the numbers above provide a hypothetical viewpoint instead of hard numbers.

Featured Image Courtesy of The Business Journals

SPECIAL OFFER (Sponsored)

Binance Futures 50 USDT FREE Voucher: Use this link to register & get 10% off fees and 50 USDT when trading 500 USDT (limited offer).


Source: https://cryptopotato.com/microstrategy-ceo-michael-saylor-privately-hodls-235m-worth-of-bitcoin/

Continue Reading

Blockchain

Bitcoin to Surpass $20,000 ATH By Early 2021 According to Raul Pal

Published

on

Former hedge fund manager and CEO of Real Vision, Raoul Pal, believes that the real impact of the COVID-19 pandemic is about to reach the financial markets. By outlining several upcoming cornerstones among traditional financial assets, he highlighted Bitcoin as the “life raft” in this situation.

Raoul Pal: Everything Has Changed

In a recent Twitter thread, the Wall Street veteran outlined the rapidly growing COVID-19 cases worldwide. The total number of infected has neared 45 million, while the death toll is almost 1,2 million.

Pal predicted that these rising numbers in Europe, the US, and Canada are about to “exert economic pressures and extinguish the Hope phase of reflation dreams.” He believes that the upcoming consequences will harm the economy even more than the early 2020 developments. A real economic recovery “will take more than a post-election stimulus in January.”

COVID-19 Cases In Europe. Source: Twitter
COVID-19 Cases In Europe. Source: Twitter

He continued by looking at several markets that have started to feel the adverse consequences and have fallen to long-term support levels. Those included the oil price, Spain’s benchmark stock market index – the IBEX 35, the EU Banks Index, the euro, the British pound, the US dollar, and more.

EU Banks Index. Source: Twitter
EU Banks Index. Source: Twitter

As such, he broached a few possible solutions – “you can buy bonds and dollars, or you can take the life raft – Bitcoin.”

“Or, to dampen the volatility of a risk-off event (we can and will see sharp BTC corrections), you can have all three for a near-perfect portfolio for this phase.” – Pal concluded.

Bitcoin Will Eat The World And Price Predictions From Pal

Pal further highlighted his positive views on Bitcoin by saying the cryptocurrency “will eat the world.” He attributed it to its performance, which is so dominant and so “all-encompassing” that it will “suck in every single asset narrative dry and spit it out.”

“Never before in my career have I seen a trade so dominant that holding any other assets makes almost no sense.”

As far as price predictions go, Pal said that $14,000 is the only resistance left in Bitcoin’s way to the all-time high at $20,000. He expects that BTC should overcome the December 2017 high by “early next year at the latest.”

Additionally, CryptoPotato recently reported an even more optimistic and long-term forecast. By using a regression on the logarithmic chart since inception, Pal brought up a model that sees Bitcoin reaching $1 million by 2025.

Featured Image Courtesy of BusinessInsider

SPECIAL OFFER (Sponsored)

Binance Futures 50 USDT FREE Voucher: Use this link to register & get 10% off fees and 50 USDT when trading 500 USDT (limited offer).


Source: https://cryptopotato.com/bitcoin-to-surpass-20000-ath-by-early-2021-according-to-raul-pal/

Continue Reading

Trending